Mobile-fixed rate reduction necessary considering mobile penetration - minister

- Thursday, November 3, 2011

Mobile-fixed rate reduction necessary considering mobile penetration - minister

Brazilian telecom regulator Anatel's decision to reduce the fees charged for mobile-fixed phone calls was necessary, considering the increase of mobile telephony in the country, communications minister Paulo Bernardo said in a statement.

"It's an unprecedented and extremely important decision. With the tremendous growth of mobile telephony in Brazil, the fee reduction became necessary," he said.

On Oct 28, the regulator announced a medium-term plan to gradually cut the interconnection fee for fixed-mobile phone calls by 2014. The plan begins to take effect in January.

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This fee, called VU-M, was created when mobile telephony deployment first began in Brazil, to finance its expansion across the country.

According to the minister, of the 0.54 reais (US$0.32) in the current VU-M fee, 0.12 reais are for fixed operators while 0.42 reais go to mobile firms. The reduction will fall upon the share for mobile firms, which will receive 10% less every year through 2014.

As most telecom groups in Brazil operate in the mobile and fixed segments (Vivo/Telefónica, Claro/Embratel and Oi), the impact in one of the verticals is expected to be offset by a gain in the other. The exception is TIM, which does not operate in the fixed segment and should thus see lower revenues.

The minister noted that besides resulting in lower-cost phone calls for end users, the decision would also affect other telecommunication segments, such as internet, as companies look to push other services to make up for lost mobile revenues.